Fast-food chain McDonald’s has said that it will permanently leave Russia after more than 30 years in the country. The company is now actively looking to sell its 850 restaurants, which have been closed since early March due to Vladimir Putin’s invasion of Ukraine.
This news, announced on 16 May, marks a symbolic end to the Westernisation of Russia’s economy after the Cold War, since McDonald’s was one of the first restaurants to set up shop in Moscow in 1990. A reported 30,000 people lined up for its grand opening.
Who would buy McDonald’s property?
With no end in sight for the war in Ukraine, it was only a matter of time before big players such as McDonald’s moved to leave Russia for good.
Like many other foreign multinationals in Russia, the company has been taking huge losses, not least since it has continued to pay its 62,000 employees (and will keep doing so until its assets are sold). With hundreds of restaurants in Russia, the suspension of service was also weighing on performance.
Little wonder, therefore, that McDonald’s announced losses of $127m, due to closures in Russia and Ukraine, in the first quarter of 2022 alone. In selling its Russian operations, McDonald’s expects to take a write-off of between $1.2bn and $1.4bn for the move.
Who will buy McDonald’s’ huge portfolio of Russian stores, one of its largest after Australia, the UK, Germany, Canada and France? The majority of McDonald’s locations in Russia are owned and operated directly by the company, unlike most other restaurant peers that franchise in Russia, making the exit even more difficult in an already unprecedented situation.
It will be almost impossible for McDonald’s to sell to a foreign buyer due to the West’s ongoing stranglehold of sanctions. The buyer, therefore, will be Russia, and with private sector players very likely to be spooked by the current economic crisis in the country, the Kremlin probably have to foot the bill and the risk.
Already, back in March, the Russian government proposed to nationalise the property of foreign companies that were divesting their operations or suspending their workers’ pay. Although the law has not been passed, it is being implemented in some respects. For example, in early May, French carmaker Renault agreed to transfer its $2.3bn Russian business to state entities for a symbolic and unspecified sum. The Kremlin plans to use the manufacturer to relaunch the historic ‘Moskvitch’ (Muscovite) car brand, a symbol of Cold War Russian manufacturing.
At this point, The White House specifically warned Russia against nationalising McDonald’s, Apple and other companies pulling out of the country, an admonition that is very likely to spur Putin on in this endeavour.
A symbolic claiming of the ‘de-arching’ process, and rebranding of one of the US’s most well-known global names, would be nothing short of a propaganda victory for the Kremlin’s rapidly polarising narrative. McIvan’s would be the ultimate anti-globalist win.